JW Marriott will get up to $10 million in future tax breaks to expand in Palm Desert

Using up to $10 million in future city tax breaks, Palm Desert's JW Marriott Desert Springs Resort & Spa is expanding, as the Coachella Valley’s largest resort aims to stay competitive as a national destination for conferences and events.

The resort is planning a 25,000-square foot expansion of its ballroom and convention space, and the city council unanimously agreed Thursday to reimburse up to half of the project’s cost — with a cap of $10 million — through refunds on future transient occupancy taxes, or TOT.

Essentially, the JW Marriott will be reimbursed depending on how much new tax revenue it generates. If the resort brings in more tax money post-expansion than the average of the past three years, it will get to keep half the difference.

Once the JW Marriott has recouped half of the project’s construction cost via TOT rebates, the city will resume taking in its full share of tax revenue generated by the resort.

And if the resort doesn't bring in any extra tax revenue after it expands, it will get no tax breaks and the city will continue to receive 100% of its TOT revenue.

The JW Marriott, which underwent a $50 million-plus renovation in 2018, is a flagship resort in the valley, with more than 880 rooms, two 18-hole golf courses, a spa and a surrounding lake with boats and fountains.

The 450-acre resort is also Palm Desert’s largest employer. Scott White, CEO of Visit Greater Palm Springs, backed the expansion and the city tax breaks as a job creator and as a way to keep the JW Marriott competitive in drawing national groups for conferences.

“We do compete with destinations such as Phoenix, Scottsdale, San Diego, Anaheim, Las Vegas, and certainly as groups continue to change and evolve, they're looking for more modern space and flexibility to expand into greater breakouts,” White told the council Thursday.

“It's very difficult times, as you know, with the world of financing out there, and this opportunity is certainly an important one,” he added.

Nusrat Mirza, the resort’s general manager, emphasized the expanded ballroom will make the JW Marriott “much more competitive” with other locations. He added the hotel currently sees an annual occupancy rate of 64%, so it has the capacity to add more event space and host more guests.

Councilmember Jan Harnik praised the agreement as “a great formula where everyone benefits.”

“It's one of those opportunities where we look into the future, and we will see the (return on investment), so I appreciate this,” Harnik said. “Whatever we can do to help a partner like the JW Marriott, we all benefit.”

Tom Coulter covers the cities of Palm Desert, La Quinta, Rancho Mirage and Indian Wells. Reach him at thomas.coulter@desertsun.com.

This article originally appeared on Palm Springs Desert Sun: JW Marriott will get up to $10M in tax breaks to expand in Palm Desert